Posts filed under ‘Economy’

Summary: In a short note, we will share the influence of the recent crude oil price deterioration on the stock market: Energy sector and the currency markets.

As a day or swing trader, Crude Oil Futures offer a fantastic instrument to trade with the up- and down moves of the market.

Crude Oil Futures on the NeverLossTrading Top-Line Chart

The chart shows how our indicators catch the beginning of each price move; since July 2014 they all pointed downwards, asking you for selling Crude Oil Futures.

A price drop from $105 to $65 relates to a price change in Crude Oil Futures of $40,000 per contract, with an average maintenance margin of $3,500/contract, had you gotten the direction right, it would have produced you $120,000 of profits, in four months, on a $10,000 investment.

A $40 price drop per barrel of oil means that all oil producers lost $40 of margin and thus their profitability perspective drastically changed.

On a short note: What are estimated costs to produce a barrel of light sweet Crude Oil?

In Canada, where a more complicated extraction method is used: $65/barrel

In the middle east, where you have the lowest production price point: $35/barrel

Offshore drilling as you find it at the coast of Mexico: $45 – $50/barrel

With the current market price for crude oil, Canada production has an issue: Profit margins are gone and all other producers realize a big cut in profitability, which will put their stocks and the entire primary energy production sector under pressure.

Crude Oil Prices and Energy Sector Stocks Compared

The above chart shows how the latest price move of energy stocks started to close the gap that had opened between crude oil prices and primary energy related stocks; however, there is still a gap that remains to be there and we can expect that one side has to give to close it.

What does this mean for currencies?

Crude Oil can only be purchased in US-Dollars on a worldwide basis; thus the demand for US-Dollars will drop, lifting the Euro (minor crude oil production) and the Yen (no crude oil production); while the British Pound (heavily related to crude oil through BP) and Canadian Dollar should rather see downside pressure.

Crude Oil Prices and Canadian Dollar Compared

Even so the Canadian Dollar had a slight value decrease in the resent days, the gap opened by the crude oil price deterioration will lead to further price pressure on the Canadian Dollar.

When you want to learn how to trade various financial markets to the up- and downside with different financial instruments or if you are in a business and you want to learn how to hedge against strong price fluctuations: Call +1 866 455 4520 or contact@NeverLossTrading.com and you will learn how to spot and follow those market moves.

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Active sonar creates a pulse of sound, often called a “ping”, and then listens for reflections (echo) of the pulse. By measuring the relative amplitude of the reflective wave, objects, their shape and form, their distance from the sonar source can be detected.

In the NeverLossTrading algorithms, we are using this knowledge in a multitude of studies to define key support and resistance levels, by pinging in advance where the amplitude of alternating prices has reflection points.

SPY Chart with Critical Wave Reflection Points

For today, December 20, 2013, we ran a ping to detect the depth of the stock market. We have, what is called triple a witching day, where three important stock market contracts are expiring:

Stock market index futures;

Stock market index options;

Stock options.

There are two major forces, with different interest and they are actually the ones producing the key reflection points, we detected:

Market Makers, which have to fulfill the contracts.

All other institutional investors, which want to close out the benefits of their investment.

Our preferred indicator asset to determine potential price reflection points for the stock market is SPY, an ETF of the S&P 500. We choose SPY as the key asset by the consequences for the option buyer and seller when settling the contracts for the physical assets by transferring stock.

After pining the depth of SPY, please mark the following critical price levels for today:

Level-1 Low: $181 – To reach this price level, the market has to drop about 5-SPX points. Closing SPY below $181 will save the Market Makers from transferring stock in a substantial amount of money and thus, when the price comes close to $181, you will see a lot of fighting and you can use this price levels for day trading to and from this critical price point.

Level-2 Low: $180 – In case the market shows weakness, closing SPY below $180 would be the market makers dream, sparing them the need to fulfill 3-times more contracts than they have to fill on the $181-level. However, the market has to move by 15-SPX points to reach this price level and only newslike today’s GDP data could be the triggering such a price move.

Level-1 High: $182 – The upper target for today is 5-SPX points above yesterday’s closing and again, positive economic news can easily get us there, while the market maker will surely try to intervene, keeping the SPY price below to spare them the fulfillment of further contracts that they rather want to expire worthless.

If you want to learn how to trade like a pro, check our offering and schedule for a personal consulting hour: Call +1 866 455 4520 or contact@NeverLossTrading.com

Good trading,

Thomas

NeverLossTrading

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On July 27, the stock market started its shift to the downside. The week of August 15 fueled the doubt in the economy and where we stand. Market prices tumbled and seem to be in a free fall. The gloom and doom prophets are back and the sky is falling.

The facts are: We just concluded a great earnings season with positive outlook of most of the major US companies. However, all of this seems to be forgotten. If the USA is rated AAA or AA+ does not make a difference in anything. It was just a political act and the world is shaking.

When will we come back to reality?

This is a key question. When fear takes over, a “chicken-little” mentality dominates and trading the markets day by day, holding few to no overnight positions is the best to do. Another alternative is to hedge current positions.

How can a private investor hedge their funds?

There are many ways and the easiest is to sell Emini S&P 500 Futures Contracts in relation to shares held. One of those contracts is in relation to about $56,000 account holdings in stocks. Therefore, if an account holder of $100,000 in stocks sells two Emini S&P 500 Futures, the account is entirely protected and even has 12% participation in favor of a downside move.
For this form of protection, the account holder needs to have about $12,000 of margin available, to sell two S&P 500 contracts.

What happens if the market goes up?

The money, which will be gained in the asset-account, will balance the losses of the hedging account, making the cross account balance equal.

More often than not, hedging can occur in the same account where the assets are held, which makes everything much more easy.
What happens if the markets continue to fall?

The account that holds the shares will lose money and the account that holds the two Emini S&P 500 contracts sold, will gain value, making the cross account balances equal again, without the need to sell all assets.

How can I liquidate the Futures contract?

Emini Futures contracts of the S&P 500 are traded around the clock (with little breaks) and so they can be initiated or liquidated at any time. Costs for buying and selling a futures contract range from $4 to $50, depending on how they are engaged: Online or with a broker.

How do know when the market turn back to the upside?

The golden rule is: When a higher high and a higher low is made.

Are there early market direction indicators?

At the moment, AAPL is the most powerful company in the Stock market. If the price of Apple Computer shares rises, the market follows and vice versa. Hence, the AAPL share development can be used as a hedge indicator.

How can a private investor make money when the markets fall without taking an uncontrollable risk?

There are many ways to participate on a downside move and it would go too far trying to explain those so we will just give a summary:

Prior to applying those methods, we highly recommend a sound education to fully understand those trading methods and their implications. NeverLossTrading is a premier institution, teaching those methods in great detail and with fantastic documentation.

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On Monday, April 11, Alcoa Inc. (NYSE: AA) the aluminum producer started out the first quarter reporting with excellent results:

– A first quarter profit of $308 million, or $0.27 per share, from a loss of $201 million, or $0.20 per share, in the year-ago period.

– Income from continuing operations attributable to Alcoa, as adjusted, for the first quarter was $317 million or $0.28 per
share.

– Revenue rose 20% to $5.96 billion from $4.89 billion.

– Analysts, on average, expected the company to report earnings of $0.27 per share on revenue of $6.32 billion.

“It was an excellent first quarter as we improved profitability across all business segments, set profit records in our midstream and downstream businesses and grew substantially,” said Alcoa Chairman and CEO Klaus Kleinfeld.

The outlook Alcoa painted for 2011 and beyond remains very positive due to the world’s growing population, increasing urbanization, and aluminum’s advantages as a light, strong and recyclable material.

What was the reaction of the stock market?

We write this article on purpose prior to the market opening and can say: the market dropped 0.6% in value, measured by the S&P Futures.

Stock market futures are traded basically around the clock and the international markets and those participating, let the price drop rather than buying into it, which would result in higher prices.

We use as a key measure the S&P 500 Emini Futures Contract and postulate: If the overnight price of this futures contract drops by 0.6% the stock market in average will start 0.6% lower into the day.

The S&P 500 as an index represent the 500 biggest US-Shareholder-Companies based on market capitalization.
What is our trading tactic based on this:

– Short term we are rather trade to the downside if we break below a neuralgic price level of 1308 for the S&P Emini contract.

– Long term we are in cash, waiting to get long on a clear signal for a market turn around based on assumed high earnings reports.

What does this mean for the overall economy?

“We see clear signs of recovery and look into a stronger economy for 2011”

If you want to participate in our ongoing market reports and interpretations and take advantage of your knowledge as a financial market investor: contact@NeverLossTrading.com.

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Our method of trading is applicable to various markets: Stock Market, Commodities, Currencies, Treasuries and their derivatives, like options
and futures.

In this publication we want to focus on the market with the most common interest: The stock market. But prior to telling which market
sectors and stocks we favor, it is important to know that we only act if the overall market dynamic proves our analysis right. Let us share some of our
imperatives:

We and nobody else knows where a share price will move to next.

We do not believe in great tips from people who portrait that they know.

The NeverLossTrading concept spots price action of institutional money on all time frames and reaps the benefits by following
where the big money is going.

Even so we have a predefined and foundation based market interpretation, we will wait until we get it confirmed and enter into a trade
when the movement starts. Over time we developed a variety of market indicators to spot the beginning and end of such movement.

This key question is often raised to us: Do you not lose time and profitability by entering late?

So much to our core principles, now we want to share how we analyzed the stock market for 2011. Besides an overall appraisal we focus on
sector development, knowing that institutional investors do the same and with that we want to be prepared if a move happens to jump in and when it ends to jump out. This spells out another of our core principles: We are not proposing long term buy and hold strategy but rather a
buy and sell strategy where we act on an our entry signals for the underlying financial investment instruments and in the same way act on exit signals. Now to our 2011 analysis:

Stock Market Evaluation by NeverLossTrading

Situation Analysis: High corporate earnings are reflected in continues stock market growth. All sectors recovered while the major grows was
initiated by a few companies with breakthrough consumer oriented information technologies and services. Other markets followed and build a solid platform of earnings on modest revenue growth for 2011.

To define our preferred market focus areas, we are using a scoring model that rates growth achievements paired with sectors earnings and combines this score with the market power potential of the examined segment. Besides overall growth strategies, the NeverLossTrading concept provides a trading plan for down-trending and sideways-trending markets.

In a short summary, here is our stock market preference list for 2011:

Financials: Our first focus are institutions that benefit from growth in the financial markets: GS, JPM, BRK.B,BEN. On a sign of recovery we will
jump on BAC and C but else stay out of banking.

Consumer Companies: We go with the world market leaders based on technology, service, unique product offering.

Industry: Again, we pick world market leaders with innovation potential.

Others: We are very selective in Energy with focus on new energies and resourceful nergy recovery or production and apply the same rinciple
to the pharmaceutical sector and only invest in companies with innovations on he horizon.

Shorting Strategy

Telecommunication: On a sign of weakness this is where we will short the market, expecting troublesome year and years to come for all major telecommunication companies.

“A largepart of trading has to do with trust, and I don’t have it,” says Mark Swenson, a 43-year-old plumber from New Hampshire who refuses to buy individual stocks” (from the above article).

Are we serious? In every market, those who can try to take control of it.

Go and sell “Plumber Cola” against Pepsi and Coke and see where you gone end up getting. Make adhesive tape and stick it to Scotch. Put a better diaper out and beat Proctor and Kimberly.

Do we really assume in financial markets, because of the security exchange commission (SEC) and TV, we have the same access to information like a
Goldman Sachs and JP Morgan?

Yeah right. They employ 105 (and this might be a low number pulled from the sky) well educated MBA’s making market analysis for them and we
feel we can get all of that through “Stock TV Entertainment” of an email newsletter we subscribe to.

Institutional Investors dominate 85% of the financial markets and they are out to succeed and care less from whom they take the money
they make.

Institutional investors have a big advantage in knowledge and we will never be able to get anywhere close. So how can we compete and prevent
that they take our money?

The answer is: Don’t fight them go with them.

Spot the action of institutional investors that can be made transparent on a stock chart and instead of fighting their action, we follow. By doing so we move in the right direction and even have an advantage that matters: speed. The private investor can get in and out of a position quick while institutions have to scale in and out – and by their scaling we spot their action and react the same, but faster.

At the end of the day, who cares that institutions dominate the market, we can grab their tail and make fantastic market runs people mostly
cannot even think off.

When you understand how to be a successful financial marketinvestor, profits will come big time. Financial markets allow a 1:100 or 1:50
leverage without even asking a bank for a credit. With that 10,000 dollars invested can act as one million – and when the million goes up 5% you make $50,000 on a $10,000 investment. But you need to know how. NeverLossTrading is a primer institution to educate you in how to follow the footsteps of the giants in the financial market to copy and leverage their action.

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Today, November 16, 2010, the key market influencer was the US-Dollar. So why did we see the Dollar rising. Not because of internal strength, but because of financial trouble in the Euro zone. After Greece getting bailed out it looks now that Irelands Banking system need the support of Brussels, which increases the overall amount of Euro floating and by that the Dollar in relation increases.

If we look at the dollar value it is composed of:

Euro

57.6%

JPY

13.5%

GBP

11.9%

CAD

9.1%

S-Krona

4.2%

CHF

3.2%

Others

0.5%

So when the Euro Drops, the US-Dollar Rises

2. US Economic Indicators

Basically positive, even so on a small scale, but the rising dollar made the market tumble today:

The National Association of Home Builders said its homebuilder confidence index rose to 16 in November from a downwardly revised 15 in October. Economists had been expecting the index to edge down to 15 from the reading of 16 originally reported for the previous month.

The Labor Department said its producer price index rose by 0.4 percent in October, matching the increases seen in each of the two previous months. Economists had been expecting the index to increase by a more significant 0.8 percent.

Excluding a jump in energy prices as well as a modest drop in foods prices, the core producer price index fell by 0.6 percent in October after edging up by 0.1 percent in September. The drop came as a surprise to economists, who had expected core prices to increase by 0.1 percent.

Meanwhile, the Federal Reserve said that industrial production was unchanged in October after falling by 0.2 percent in September. Economists had been expecting production to increase by 0.3 percent.

3. Stock Market

Wal-Mart (WMT) reported third-quarter net income of $0.95 per share, topping estimates for earnings of $0.90 per share. Sales came in at $101.2 billion, short of consensus estimates for $102.43 billion for the quarter.Wal-Mart also forecast fourth quarter earnings of $1.29 to $.133 per share, above the $1.28 per share mark forecast on Wall Street.

Home improvement retailer and Dow component Home Depot Inc. (HD) posted third-quarter earnings of $0.51 per share, just above the $0.48 per share estimates for the period. Quarterly sales totaled $16.6 billion, above the $16.59 billion expected for the quarter.

4. Bonds and Notes

The big sell off on Bonds and Notes continues and might have found a potential bottom today. Interesting how the market exited bonds so rapidly even so a big demand will be generated by the Fed, buying back $600 billion in Bonds.

5. Commodities

On the front of commodities, the rising US Dollar did his dues and we are showing landslides to the downside: Gold, Crude Oil, Wheat, Sugar whatever you touch is on run down.

6. Conclusion

All securities cannot run into one direction, one side has to give: Bonds or Socks, Stocks or Commodities. The dollar strength is theoretical and might find a top at 80 Cents (/DX Dollar Index).

Under any circumstances it is a good time for day trading and even so the overall direction is down, there might be a good opportunity for a short term rise of Stocks and Commodities with a sell at the Thanksgiving Week.